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Blockchain And Real Estate: Humanitarianism Or Capitalism? Part II

Avi is a pioneer in real-estate-blockchain applications and oversees r.e. development and property management interests in Middle Tennessee.

In Part I, we explored how blockchain-based real estate applications can have a global impact for the benefit of human welfare and societal reform. But how can real estate blockchain applications change how the industry functions as the early adopters begin to capitalize on this new technology?

And by “capitalize,” I mean utilize blockchain-based applications to turn a profit by providing existing services, re-imagining existing services or creating opportunities for new services.

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Existing Services

Providing existing services is the simplest adoption. Companies that have utilized blockchain to provide existing services include such Service-as-a-Software (SaaS) companies as Ubitquity for title recording (Full disclosure: I am an advisor for Ubitquity) and ChromAway for system management.

By introducing blockchain applications, neither companies nor the services they provide change the way their consumers continue to conduct business. However, the use of blockchain technology will likely enhance the core elements of service functionality, including transparency or security.

Re-Imagining Existing Services

Re-imagining existing services could make them more efficient, fluid and accessible. Crowdfunding, fractional ownership, REIT distribution payments and home equity loans represent just a few examples of existing services that could be significantly improved — and more widely utilized — through the creative application and integration of blockchain technology.

Imagine, for example, the power of leveraging blockchain to the consumer lending process. With blockchain technology, traditional resource-sucking speed bumps such as title searches and creditworthiness could be redesigned and improved, relegating traditional consumer lending practices to the industry’s past. Instead, an ever-increasing number of lenders and consumer borrowers will grow the market segment as a whole, thus expanding the entire financial pie.

Similarly, rather than re-imagining existing services, we can simply re-engineer existing systems by introducing blockchain functionality to certain steps of a given system workflow. Here, the blockchain would function as a component within a larger array of technologies — such as cloud services or internet of things — that combine to provide an improved package of services and better system management. Companies like CPROP are currently tackling this complex but promising arena of system workflow streamlining within the greater context of managing the complete chain of events that constitute a real-estate transaction.

Now for the really dramatic part — the stuff that hasn’t even reached the drawing-board stage yet.

Introducing New Services

What kind of services exist only in theory or on paper that could never be put into practice effectively before blockchain? A good example might be leased-back securities. Blockchain applications could provide lenders with access to real-time data on lease conditions, rent rolls and payment histories of commercial tenants. With this level of transparency, such leases may then be packaged, rated and sold as a security. As you can imagine, this would then allow large leaseholders (e.g., JLL) to convert the future value of their lease-holdings into cash now. Think how such an innovative blockchain-enabled service could unlock access to hundreds of millions of previously unavailable dollars.

To date, we’ve looked at two views — humanistic and capitalist — as relatively discrete entities. However, what if they could intersect? Next, we will explore a specific use case that showcases the true value proposition of blockchain for the real estate industry of the future.